When Do Heterodox Stabilization Programs Work? Lessons from Experience

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When Do Heterodox Stabilization Programs Work? Lessons from Experience

Kiguel and Liviatan, 1992.

What advantages and disadvantages does the heterodox strategy offer to stabilization programs in countries with chronic high inflation? Heterodox stabilization programs, in our definition, are those that support orthodox policies - that is, tight fiscal policy and a fixed exchange rate- with the initial, temporary use of incomes policies-that is, price and wage controls. This evaluation, based on several heterodox programs, successful and unsuccessful, from the 1960s and 1980s in Latin American countries and Israel, affords four principal lessons.